BANK OF THE JAMES FINANCIAL GROUP INC
For the period ended Sep 30, 2025. Filed Nov 14, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2025 · Filed Nov 14, 2025
BOTJ$24.44+2.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-06-30; filed 2025-08-13.
0001562762-25-000212
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-09-30; filed 2025-11-14.
0001275101-25-000007
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 181 previous paragraphs and 203 current paragraphs.
121 unchanged; 41 reworded; 39 added; 17 removed; 2 previous and 2 current paragraphs rearranged.
Tables are not compared: 9 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (39)
Current report
Prolonged U.S. federal government shutdowns (lapses in appropriations), which may disrupt economic activity, delay or reduce federal payments and guaranty programs (including small‑business lending), constrain capital markets or regulatory processes, and reduce the availability of government economic data relied upon by market participants and monetary policymakers.
Current report
Developments related to digital assets, including cryptocurrencies and stablecoins, and changes in related laws, supervisory expectations, capital or accounting frameworks, customer adoption, or payment rails, any of which could affect deposit flows, liquidity management, third‑party relationships, operational resiliency, compliance obligations, or reputational risk.
Current report
Our ability to pay dividends, repurchase shares, or otherwise return capital to shareholders, which is subject to our capital position and earnings, applicable laws and regulations (including capital buffer and stress‑testing requirements), regulatory approvals or supervisory actions, and the discretion of our Board of Directors.
Current report
Changes in federal, state, or local tax laws, regulations, rates, or administrative interpretations and the timing of regulatory guidance or implementation that could affect our effective tax rate, deferred tax assets, capital planning, or after‑tax earnings.
Current report
In September 2025, the Bank opened its full-service branch in Nellysford, Virginia and closed the temporary branch it had been operating.
Current report
Total loans, excluding loans held for sale, increased to $659,586,000 on September 30, 2025, from $643,596,000 on December 31, 2024, an increase of 2.37%. Growth was driven primarily by increases in commercial and commercial real estate portfolios, reflecting ongoing regional business activity, while residential and consumer lending levels remained stable.
Current report
Total loans, excluding loans held for sale and net of the allowance for loan losses, increased to $653,288,000 on September 30, 2025, from $636,552,000 on December 31, 2024, an increase of 2.63%. Growth was driven primarily by increases in commercial and commercial real estate portfolios, reflecting ongoing regional business activity, while residential and consumer lending levels remained stable.
Current report
Loans held for sale totaled $3,766,000 at September 30, 2025, compared to $3,616,000 at December 31, 2024, an increase of 4.15%, due primarily to normal quarterly fluctuations in mortgage production and secondary market sales.
Current report
Restricted stock, consisting of stock in the Federal Reserve, the Federal Home Loan Bank of Atlanta (FHLBA), and our correspondent banks, totaled $1,828,000 at September 30, 2025, compared with $1,821,000 at December 31, 2024. These holdings are carried at cost and evaluated for impairment based on par value recoverability rather than temporary market declines.
Current report
Stockholders’ equity totaled $76,972,000 at September 30, 2025, compared with $64,865,000 at December 31, 2024, an increase of 18.66%, primarily reflecting retained earnings growth and a reduction in accumulated other comprehensive loss due to
Current report
improving unrealized positions on available-for-sale securities.
Current report
Basic and diluted earnings per common share were each $0.61 and $1.39 for the three and nine months ended September 30, 2025, compared with $0.44 and $1.39 for the same periods in 2024.
Current report
The increase in net income for the three months ended September 30, 2025, compared with the same period in 2024, was primarily driven by higher net interest income, lower interest expense, and growth in noninterest income, partially offset by an increase in noninterest expense. The slight decrease in net income for the nine-month period ended September 30, 2025, compared with the same period in 2024, was primarily due to higher operating expenses associated with technology investments and personnel growth, which offset improvements in revenue and credit performance.
Current report
The Company recorded a provision for credit losses of $91,000 for the three months ended September 30, 2025, compared with $92,000 for the same period in 2024. For the nine-month period, the Company recorded a recovery of provision for credit losses of $301,000, compared with a recovery of provision of credit losses of $584,000 in 2024.
Current report
Noninterest income increased to $4,169,000 and $11,527,000 for the three and nine months ended September 30, 2025, compared with $3,823,000 and $11,321,000 for the same periods in 2024, driven by higher wealth management fees and loan sale gains.
Current report
Noninterest expense increased to $9,160,000 and $28,441,000 for the three and nine months ended September 30, 2025, from $8,776,000 and $25,602,000 for the same periods in 2024, primarily reflecting increases in salaries and benefits, and, in the nine months ended September 30, 2025, consulting fees incurred in negotiation the Bank’s core provider contract.
Current report
These operating results produced an annualized return on average stockholders’ equity of 15.24% and 12.34% for the three and nine-month periods ended September 30, 2025, compared with 12.86% and 13.95% for the same periods in 2024. The annualized return on average assets was 1.07% and 0.83% for the three and nine-month periods ended September 30, 2025, compared with 0.80% and 0.86% for the same periods in 2024.
Current report
The improvement in profitability during the third quarter of 2025 reflects continued balance sheet growth, disciplined funding cost management, and stable asset quality, while year-to-date results were tempered by higher operating expenses associated with technology initiatives and regulatory compliance investments.
Current report
Net interest income for the three and nine months ended September 30, 2025, was $8,300,000 and $24,269,000, respectively, compared to $7,509,000 and $21,550,000 for the same periods in 2024, representing increases of 10.5% and 12.6%.
Current report
Thenet interest margin was 3.44% for the quarter ended September 30, 2025, and 3.37% for the nine-month period, compared with 3.16% and 3.07% for the corresponding periods in 2024. Margin expansion was largely the result ofrising loan yields and lower funding costs, reflecting an improved balance between asset sensitivity and funding mix. Although short-term interest rates have stabilized, future rate movements could continue to influence the margin depending on loan repricing and deposit rate competition. For example,
Current report
Noninterest income totaled $4,169,000 and $11,527,000 for the three and nine months ended September 30, 2025, compared to $3,823,000 and $11,321,000 for the same periods in 2024, representing increases of 9.1% and 1.8%, respectively. The improvement for the quarter was primarily attributable to higher gains on sales of loans held for sale, increased wealth management fees, and stable service fee income, partially offset by lower other income and reduced gains on available-for-sale securities.
Current report
The major components of noninterest income for the three and nine months ended September 30, 2025, as compared to the comparable periods in 2024, were as follows:
Current report
Wealth management fees increased to$1,362,000 and$3,917,000, up from$1,244,000 and$3,583,000 for the comparable 2024 periods, reflecting continued growth in client assets under management.
Current report
Service charges, fees, and commissions were$1,046,000 and$3,002,000, compared with$991,000 and$2,930,000 for the same periods in 2024, reflecting steady transactional and deposit activity.
Current report
Life insurance income grew slightly to$195,000 and$573,000, from$189,000 and$531,000, driven by the continued accumulation of cash surrender value on bank-owned life insurance policies.
Current report
Other income was$297,000 and$340,000, compared with$31,000 and$669,000 in the same 2024 periods. The increase for the three month period was due to SBIC fund income. The decrease for the nine month periods reflects reflects lower miscellaneous gains and fewer one-time income items.
Current report
Gains on sales of available-for-sale securities totaled$27,000 for both the three- and nine-month periods ended September 30, 2025, compared with$42,000 and$82,000 for the corresponding 2024 periods.
Current report
The increase in noninterest income for the third quarter demonstrates the Company’s ability to generate consistent fee-based revenue, particularly in wealth management and mortgage banking, despite lower securities gains and fewer nonrecurring items.
Current report
Noninterest expense for the three and nine months ended September 30, 2025, increased to $9,160,000 and $28,441,000, from $8,776,000 and $25,602,000 for the same periods in 2024 — representing increases of 4.4% for the quarter and 11.1% year-to-date. The increase primarily resulted from higher salaries and employee benefits and continued investment in technology, data processing, and customer-facing systems.
Current report
Total personnel expense (salaries and employee benefits) was $5,516,000 and $15,650,000 for the three and nine months ended September 30, 2025, compared to $4,920,000 and $14,256,000 for the same periods in 2024, reflecting merit increases, normal annual adjustments, and staffing additions to support commercial and retail growth, as well as accruals for anticipated year-end employee compensation.
Current report
Professional and other outside expenses totaled $725,000 and $3,194,000 for the three and nine months ended September 2025, compared to $688,000 and $2,125,000 for the same periods in 2024. The increase for the nine-month period was primarily due to a one-time consulting fees incurred earlier in the year related to the core processing system contract renewal.
Current report
Data processing expense totaled $381,000 and $1,984,000 for the three and nine months ended September 2025, compared to $794,000 and $2,352,000. The decrease in data processing costs was driven by lower ongoing fees following the renewal of the core processing system contract and the application of vendor credits.
Current report
Occupancy and equipment expenses were $523,000 and $697,000, respectively, for the quarter, up modestly from $514,000 and $640,000 in the prior-year period, reflecting ongoing branch improvements and facility maintenance.
Current report
Other noninterest expenses, including marketing, credit-related costs, FDIC insurance, and amortization of intangibles, totaled $1,318,000 for the quarter, up from $1,240,000 in the same period of 2024, primarily due to higher insurance and operating costs associated with the Company’s growth.
Current report
The Company remains focused on managing expenses efficiently while investing in strategic initiatives to support long-term growth, technology advancement, and customer engagement.
Current report
Nonperforming loans represented 0.29% of total loans at September 30, 2025, compared with 0.25% at December 31, 2024. The allowance for credit losses for loans to total loans ratio was 0.95%, while the allowance for credit losses to nonperforming loans ratio was 332.35%, indicating a strong coverage position.
Current report
The Company continues to maintain disciplined credit standards and conservative lending practices. Credit metrics remain solid across all portfolio segments, and management believes the current allowance is appropriate to absorb expected losses inherent in the loan portfolio.
Current report
The income tax expense for the three and nine months ended September 30, 2025, was $466,000 and $1,357,000, respectively, compared to $474,000 and $1,527,000 for the same periods in 2024. This represents an effective tax rate of approximately 14.5% for the three months ended September 30, 2025, and 17.7% for the nine months ended September 30, 2025, compared with 19.2% and 19.4% for the corresponding 2024 periods.
Current report
The Company’s income tax expense decreased for both the three- and nine-month periods ended September 30, 2025, primarily reflecting the impact of amended federal and state income tax returns filed for the 2021 through 2024 tax years. The amended filings resulted in a tax overpayment, which reduced the Company’s third-quarter tax payment and carried through to the year-to-date results. In addition, the effective tax rate was favorably affected by higher levels of tax-exempt income from municipal securities and tax-advantaged earnings on bank-owned life insurance (“BOLI”). These factors collectively reduced the Company’s effective tax rate below the statutory rate for both the quarterly and year-to-date periods.
Removed paragraphs (17)
Previous report
Goodwill arises from business combinations and is generally determined as the excess of fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquired entity, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill and intangible assets acquired in a business combination and determined to have an indefinite useful life are not amortized, but tested for impairment at least annually or more frequently if events and circumstances exist that indicate that a goodwill impairment test should be performed. The Company has selected September 1 of each year as the date to perform the annual impairment test. Impairment testing requires a qualitative assessment or that the fair value of each of the Company’s reporting units be compared to the carrying amount of their net assets, including goodwill. If the fair value of a reporting unit is less than its carrying value, an expense may be required to write down the related goodwill to record an impairment loss. Determining fair value is subjective, requiring the use of estimates, assumptions and management judgment. Intangible assets with finite useful lives are amortized over their estimated useful lives to their estimated residual values, if any. Goodwill is the only intangible asset with an indefinite life on our consolidated balance sheet.
Previous report
Real Property located at 2935 Rockfish Valley Highway, Nellysford, Virginia. On September 18, 2023, the Bank purchased real property located at 2935 Rockfish Valley Highway, Nellysford, Virginia. The building on the property previously served as abank branch for another financial institution. The Bank anticipates that the cost to upfit the building will be minimal. The property is subject to a restrictive covenant that prohibits the Bank from using the property for any banking-related activity until the covenant expires in September 2025. Following the expiration of this restrictive covenant, the Bank intends to use this property as a permanent branch in Nellysford, Virginia. We anticipate relocating the Temporary Nellysford Branch to this location in the fall of 2025.
Previous report
Total loans, excluding loans held for sale, increased to $655,397,000 on June 30, 2025 from $643,596,000 on December 31, 2024. Loans, excluding loans held for sale and net of deferred fees and costs and including the allowance for credit losses, increased to $649,089,000 as of June 30, 2025 from $636,552,000 on December 31, 2024, an increase of 1.97%. This increase was primarily due to higher balances in commercial loans (up $4,092,000), commercial real estate (up $6,936,000), and consumer loan categories (up $2,307,000), partially offset by decreases in residential loan portfolios (down $1,534,000).
Previous report
Investment in federal agencies (Federal Reserve and FHLBA) stock totaled $1,461,000 at June 30, 2025, compared with $1,454,000 at December 31, 2024. Both Federal Reserve and FHLBA stock are restricted securities; their value for impairment evaluation is based on ultimate par value recoverability rather than temporary market declines.
Previous report
In June 2020, Financial issued $10,050,000 in notes pursuant to a private placement. The notes bore interest at 3.25% per annum and matured on June 30, 2025. As discussed in Note 4, at maturity, Financial paid the notes in full. Financial expects to save approximately $327,000 annually in interest expense as a result of retiring this debt.
Previous report
For the three months ended June 30, 2025, the Company recorded a credit loss recovery of $528,000 compared to a credit loss recovery of $123,000 for the same period in 2024, positively impacting net income. For the six months ended June 30, 2025, credit loss recoveries decreased to $391,000 compared with $676,000 for the same period in 2024.
Previous report
For the three and six months ended June 30, 2025, noninterest expense increased to $9,455,000 and $19,281,000 from $8,739,000 and $16,827,000 for the same periods in 2024, driven by higher professional fees and continued investments in technology and customer-facing systems.
Previous report
For the three months ended June 30, 2025, noninterest income declined to $4,075,000 from $4,191,000 for the same period in 2024, primarily reflecting lower other income and the absence of gains on sales of available-for-sale securities. For the six months ended June 30, 2025, noninterest income increased to $7,358,000 from $7,498,000 for the same period in 2024, driven by higher gains on sales of loans held for sale and increased wealth management fees, partially offset by lower other income and the absence of securities gains.
Previous report
These operating results represent an annualized return on average stockholders’ equity of 15.89% and 10.81% for the three and six‐month periods ended June 30, 2025, compared with 14.35% and 14.60% for the three and six‐month periods ended June 30, 2024. The increase for the three months ended June 30, 2025, from the comparable 2024 period was due primarily to higher net income and relatively stable average equity, while the decrease for the six months ended June 30, 2025, versus the first six months of
Previous report
2024 reflected lower net income and an increase in average equity resulting from higher retained earnings. The Company had an annualized return on average assets of 1.06% and 0.70% for the three and six‐month periods ended June 30, 2025, compared with 0.87% and 0.89% for the three and six‐month periods ended June 30, 2024. The increase in return on average assets for the quarter was driven by the improved net income performance, while the decline for the six‐month period largely resulted from the year-over-year decrease in net income coupled with growth in average assets.
Previous report
Noninterest income totaled $4,075,000 and $7,358,000 for the three and six months ended June 30, 2025, compared to $4,191,000 and $7,498,000 for the same periods in 2024. The slight decrease was primarily the result of lower other income (down
Previous report
$451,000) and the absence of any gains on sales of available-for-sale securities (versus $40,000 for the three months ended June 30, 2024). These decreases were partially offset by increases in:
Previous report
Wealth management fees, which rose to $1,300,000 and $2,555,000 from $1,176,000 and $2,339,000.
Previous report
Life insurance income, which grew to $190,000 and $378,000 from $183,000 and $342,000.
Previous report
For the three and six months ended June 30, 2025, service charges, fees and commissions were $975,000 and $1,956,000, compared with $986,000 and $1,939,000 for the same periods in 2024, reflecting essentially flat growth year over year. Other noninterest income declined to $21,000 and $43,000 for the three and six months ended June 30, 2025, from $533,000 and $638,000 in the comparable 2024 periods.
Previous report
Noninterest expense for the three and six months ended June 30, 2025, increased to $9,455,000 and $19,281,000 from $8,739,000 and $16,827,000 for the same periods in 2024, representing an 8.2% increase for the quarter and a 14.6% increase year-to-date. This increase primarily resulted from higher salaries and employee benefits, along with a significant rise in professional, data processing, and other outside services compared to prior periods. Total personnel expense was $5,357,000 for the three months ended June 30, 2025, compared to $4,892,000 for the same period in 2024. The increase was largely due to merit increases, compensation-related accruals, and additional staff hired to support our expanded branch network and enhanced customer-service initiatives. Professional, data processing and other outside services expense was $2,145,000, up $745,000, or 53.2%, from $1,400,000 in the prior-year quarter. The increase included (a) a non-recurring consulting fee of approximately $1,000,000 incurred in the first quarter 2025 for negotiating and amending our core processing platform contract (effective April 1, 2025); and (b) ongoing investments in data analytics, cyber-security monitoring, and treasury-management platform enhancements. Occupancy and equipment expense rose modestly to $985,000 (from $925,000), reflecting branch remodels and technology upgrades. Other noninterest expense totaled $1,024,000, up from $884,000, driven by higher marketing costs and professional memberships.
Previous report
The income tax expense for the three and six months ended June 30, 2025, was $694,000 and $891,000, compared to $518,000 and $1,053,000 for the three and six months ended June 30, 2024. This represents an effective tax rate of 20.43% and 20.08% for the three and six months ended June 30, 2025, as compared with 19.43% and 19.54% for the same periods in 2024. Our effective rate was lower than the statutory corporate tax rate in all periods primarily because of federal income tax benefits resulting from the tax treatment of earnings on bank-owned life insurance and interest earned on tax-exempt municipal bonds.
Reworded paragraphs (41)
Previous wording
The Allowance for Credit Losses on Loans (“ACLL”) is management’s estimate of the current expected credit losses in our loan portfolio and held-to-maturity securities portfolio. With the exception of loans related to agriculture, the Company uses a discounted cash flow model to estimate its current expected credit losses in our loan portfolioand held-to-maturity securities portfolio. Actual losses could differ significantly from the historical factors that we use in estimating risk. For information on the Company’s policies on the ACLL, please refer to Note 2 – “Allowance for Credit Losses - Loans” in the Company’s Form 10-K for the year ended December 31, 2024. See “Management’s Discussion and Analysis Results of Operations – Allowance and Provision for Credit losses”below for further discussion of the allowance for credit losses.
Current wording
The Allowance for Credit Losses on Loans (“ACL”) is management’s estimate of the current expected credit losses in our loan portfolio and held-to-maturity securities portfolio. With the exception of loans related to agriculture, the Company uses a discounted cash flow model to estimate its current expected credit losses in our loan portfolioand held-to-maturity securities portfolio. Actual losses could differ significantly from the historical factors that we use in estimating risk. For information on the Company’s policies on the ACL, please refer to Note 2 – “Allowance for Credit Losses - Loans” in the Company’s Form 10-K for the year ended December 31, 2024. See “Management’s Discussion and Analysis Results of Operations – Allowance and Provision for Credit losses”below for further discussion of the allowance for credit losses.
Previous wording
We conduct our investment advisory business through PWW, which Financial acquired on December 31, 2021. PWW is a Lynchburg, Virginia-based investment advisory firm that has approximately $929,957,000 in assets under management and advisement as of June 30, 2025. PWW generates revenue primarily through investment advisory fees.
Current wording
We conduct our investment advisory business through PWW, which Financial acquired on December 31, 2021. PWW is a Lynchburg, Virginia-based investment advisory firm that has approximately $984,746,000 in assets under management and advisement as of September 30, 2025. PWW generates revenue primarily through investment advisory fees.
Previous wording
A temporary branch located at 2773 Rockfish Valley Highway, Nellysford, Virginia (the “Temporary Nellysford Branch”); and
Current wording
A branch located at 2935 Rockfish Valley Highway, Nellysford, Virginia (the “Nellysford Branch”); and
Previous wording
Although the Bank cannot predict thefinancial impact of each new branch with certainty, management generally anticipates that each new branch will become profitable within 12 to 18 months of operation.
Current wording
Although the Bank cannot predict thefinancial impact of each new branch with certainty, management generally expects that each new branch will become profitable within 12 to 18 months of operation.
Previous wording
The Bank’s exposure to credit loss in the event of nonperformance by the other party to thefinancial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. A summary of the Bank’s commitments follows:
Current wording
The Bank’s exposure to credit loss in the event of nonperformance by the other party to thefinancial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. A summary of the Bank’s commitments follows (dollars in thousands):
Previous wording
The following discussion represents management’s discussion and analysis of thefinancial condition of Financial as of June 30, 2025 and December 31, 2024 and the results of operations of Financial for the three and six-month periods ended June 30, 2025 and 2024. This discussion should be read in conjunction with thefinancial statements included elsewhere herein. Allfinancial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.
Current wording
The following discussion represents management’s discussion and analysis of thefinancial condition of Financial as of September 30, 2025 and December 31, 2024 and the results of operations of Financial for the three and nine-month periods ended September 30, 2025 and 2024. This discussion should be read in conjunction with thefinancial statements included elsewhere herein. Allfinancial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.
Previous wording
Total assets were $1,004,242,000 on June 30, 2025 compared with $979,244,000 at December 31, 2024, an increase of 2.56%. The increase in total assets was primarily due to growth in federal funds sold, securities available-for-sale, loans (net of the allowance for credit losses), and loans held for sale.
Current wording
Total assets were $1,020,125,000 on September 30, 2025, compared with $979,244,000 at December 31, 2024, an increase of 4.18%. The increase in total assets was primarily due to growth in federal funds sold, securities available-for-sale, and loans (net of the allowance for credit losses), reflecting continued loan demand and prudent liquidity management.
Previous wording
Total deposits increased from $882,404,000 as of December 31, 2024 to $910,527,000 on June 30, 2025, an increase of 3.19%. This growth was largely driven by the reversal of our one-way Insured Cash Sweep (ICS) placements—initiated at year-end 2024 to manage balance sheet size—which returned to our books early in 2025. We continue to utilize the reciprocal portion of the ICS program for customers requiring full FDIC insurance (where those balances remain on our balance sheet as brokered deposits), and may re-deploy the non-reciprocal option again as market conditions warrant.
Current wording
Total deposits increased from $882,404,000 as of December 31, 2024, to $919,796,000 on September 30, 2025, an increase of 4.24%. This growth was largely driven by customer inflows into money market and time deposit products as well as non-interet bearing deposits. The Company continues to utilize the reciprocal portion of the Insured Cash Sweep (ICS) program for customers requiring full FDIC insurance, and may re-deploy the non-reciprocal option as market and liquidity conditions warrant.
Previous wording
The following summarizes the position of the Bank’s loan portfolio as of the dates indicated by dollar amount and percentages (dollar amounts in thousands):
Current wording
The following summarizes the position of the Bank’s loan portfolio as of the dates indicated by dollar amount and percentages (dollar in thousands):
Previous wording
Subsegments of the loan portfolio are set forth in Note 8 of ourfinancial statements. As a community bank, the Bank is committed to growing assets through quality loan growth by providing credit to small and mid-size businesses and individuals within the markets it serves. Based on the loan portfolio as of June 30, 2025, non-owner occupied commercial real estate loans and construction and land development loans were approximately $212,825,000, or 32.5 % of total loans.
Current wording
Subsegments of the loan portfolio are set forth in Note 8 of ourfinancial statements. As a community bank, the Bank is committed to growing assets through quality loan growth by providing credit to small and mid-size businesses and individuals within the markets it serves. Based on the loan portfolio as of September 30, 2025, non-owner-occupied commercial real estate loans and construction and land development loans totaled $230,162,000, representing approximately 34.9% of total loans.
Previous wording
The Bank closely monitors concentrations within its commercial real estate loan portfolio. As of June 30, 2025, non-owner occupied commercial real estate loans totaled $202,147,000, or approximately 31% of total loans. This amount was calculated by purpose code and is consistent with the Call Report that the Bank files with the FDIC. The Bank has minimal exposure to loans secured by large office buildings or shopping centers (less than 5% of the non-owner occupied CRE portfolio). The majority of our non-owner occupied commercial loans are secured by smaller, multi-tenant properties diversified across various industries and geographies within our market areas.
Current wording
The Bank closely monitors concentrations within its commercial real estate loan portfolio. As of September 30, 2025, non-owner occupied commercial real estate loans totaled $215,798,000, or approximately 32.7% of total loans. This amount was calculated by purpose code and is consistent with the Call Report that the Bank files with the FDIC. The Bank has minimal exposure to loans secured by large office buildings or shopping centers (less than 5% of the non-owner occupied commercial real estate (CRE) portfolio). The majority of our non-owner occupied commercial loans are secured by smaller, multi-tenant properties diversified across various industries and geographies within our market areas.
Previous wording
Total nonperforming assets, which consist of nonaccrual loans, loans past due 90 days or more and still accruing were $1,846,000 at June 30, 2025, compared with $1,640,000 at December 31, 2024. As discussed under “Results of Operations—
Current wording
Total nonperforming assets, which consist of nonaccrual loans, loans past due 90 days or more and still accruing were $1,895,000 at September 30, 2025, compared with $1,640,000 at December 31, 2024. As discussed under “Results of Operations—Allowance and Provision for Credit Losses,” management has provided for any anticipated losses on these loans in the allowance for credit losses.
Previous wording
OREO represents real property acquired by the Bank for debts previously contracted, including through foreclosure or deeds in lieu of foreclosure. We had no OREO at either June 30, 2025, or December 31, 2024. The Bank neither acquired nor disposed of any OREO during the quarter ended June 30, 2025; the OREO balance remained zero.
Current wording
Other real estate owned (“OREO”) represents real property acquired by the Bank for debts previously contracted, including through foreclosure or deeds in lieu of foreclosure. We had no OREO at September 30, 2025 and December 31, 2024. The Bank neither acquired nor disposed of any OREO during the three and nine months ended September 30, 2025..
Previous wording
Cash and cash equivalents increased to $77,907,000 at June 30, 2025, from $73,309,000 at December 31, 2024. Cash and cash equivalents consist of cash due from correspondents, cash in vault, and overnight investments (including federal funds sold). Deposit inflows allowed management to deploy excess liquidity into overnight Fed funds. Cash and cash equivalents are subject to routine fluctuations in deposits, including transactional accounts and professional settlement accounts.
Current wording
Cash and cash equivalents increased to $85,451,000 at September 30, 2025, from $73,309,000 at December 31, 2024. Cash and cash equivalents consist of cash due from correspondents, cash in vault, and overnight investments (including federal funds sold). The increase was primarily attributable to higher federal funds sold balances, which rose to $57,001,000 at September 30, 2025, compared to $50,022,000 at December 31, 2024. Deposit inflows during the period allowed management to deploy excess liquidity into overnight Fed funds. Cash and cash equivalents remain subject to routine fluctuations in transactional and professional settlement accounts.
Previous wording
Securities held-to-maturity were essentially flat, decreasing slightly to $3,598,000 at June 30, 2025, from $3,606,000 at December 31, 2024, due to normal net amortization of premiums.
Current wording
Securities held-to-maturity decreased slightly to $3,594,000 at September 30, 2025, from $3,606,000 at December 31, 2024, due to normal net amortization of premiums.
Previous wording
Securities available-for-sale, carried at fair market value, increased by $8,669,000 to $196,585,000 at June 30, 2025, from $187,916,000 at December 31, 2024. During the quarter ended June 30, 2025, the Bank purchased $6,280,000 of available-for-sale securities and received $12,000,000 in proceeds from calls, maturities, and paydowns. As of June 30, 2025, we had an unrealized tax-effected loss of $23,737,000 (or $18,753,000 after tax benefit). We do not expect to realize these losses, as we have both the intent and ability to hold the securities until recovery or maturity.
Current wording
Securities available-for-sale, carried at fair market value, increased to $202,506,000 at September 30, 2025, from $187,916,000 at December 31, 2024, an increase of $14,590,000, reflecting portfolio growth and reinvestment of excess liquidity, as well as an increase in fair value resulting from a decline in interest rates from December 31, 2024. As of September 30, 2025, unrealized losses on securities available‑for‑sale totaled $19.928 million pre‑tax and $15.743 million after tax (21% tax effect). These losses are primarily related to market interest rate movements, and management does not expect to realize them, as the Bank has both the intent and ability to hold the securities until recovery or maturity.
Previous wording
Liquid assets, on a consolidated basis, were $274,492,000 on June 30, 2025 in the form of cash, interest-bearing and noninterest-bearing deposits with banks, federal funds sold and available-for-sale investments. The Bank has pledged (market values):
Current wording
Liquid assets, on a consolidated basis, were $287,957,000 on September 30, 2025, in the form of cash, interest-bearing and noninterest-bearing deposits with banks, federal funds sold, and available-for-sale investments. This represents an increase from December 31, 2024, when liquid assets totaled approximately $261,225,000, primarily reflecting higher balances in federal funds sold and investment securities.
Previous wording
approximately $37,000,000 of our available-for-sale securities as collateral with correspondent banks, including the FHLBA, for collateralized lines of credit;
Current wording
approximately $34,000,000 of our available-for-sale securities as collateral with correspondent banks, including the FHLBA, for collateralized lines of credit;
Previous wording
approximately $49,000,000 of our available-for-sale securities as security for public deposits; and
Current wording
approximately $51,000,000 of our available-for-sale securities as security for public deposits; and
Previous wording
approximately $26,000,000 of our available-for-sale securities as collateral for advances at the Federal Reserve Bank’s discount window.
Current wording
approximately $25,000,000 of our available-for-sale securities as collateral for advances at the Federal Reserve Bank’s discount window.
Previous wording
If additional liquidity is needed, the Bank can purchase up to $53,000,000 of Fed funds through correspondent relationships and borrow from the FHLBA by pledging additional investments. In addition, the Bank has borrowing capacity with the FHLBA of approximately $20,000,000 related to pledged loans. As of June 30, 2025, the Bank had no borrowings from any of these sources. Management believes that liquid assets were adequate at June 30, 2025 and anticipates additional liquidity from deposit growth and loan repayments.
Current wording
If additional liquidity is needed, the Bank can purchase up to $53,000,000 of Fed funds through correspondent relationships and borrow from the FHLBA by pledging additional investments. In addition, the Bank has borrowing capacity with the FHLBA of approximately $17,000,000 related to pledged loans. As of September 30, 2025, the Bank had no borrowings from any of these sources. Management believes that liquid assets were adequate at September 30, 2025 and anticipates additional liquidity from deposit growth and loan repayments.
Previous wording
While we have not experienced unusual pressure on deposit balances or liquidity, management continues to closely monitor sources and uses of funds to meet cash flow requirements while seeking to maximize profits. The Company’s total uninsured deposits—amounts, subject to aggregation rules, that exceed the FDIC insurance limit of $250,000—were approximately $282,000,000, or 31% of total deposits, at June 30, 2025. These were estimated using the same methodologies and assumptions as regulatory reporting.
Current wording
While we have not experienced unusual pressure on deposit balances or liquidity, management continues to closely monitor sources and uses of funds to meet cash flow requirements while seeking to maximize profits. The Company’s total uninsured deposits—amounts, subject to aggregation rules, that exceed the FDIC insurance limit of $250,000—were approximately $276,000,000, or 30% of total deposits, at September 30, 2025. These were estimated using the same methodologies and assumptions as regulatory reporting.
Previous wording
At June 30, 2025, the Bank had a leverage ratio of 8.85%, a Tier 1 risk-based capital ratio and a Common Equity Tier 1 (CET1) ratio of 11.38%, and a total risk-based capital ratio of 12.19%. As of both June 30, 2025 and December 31, 2024, the Bank’s regulatory capital levels exceeded those established for well-capitalized institutions. The Tier 1 risk-based capital ratio decreased from December 31, 2024, primarily because the Bank made a dividend payment to Financial of $5,000,000 in June 2025, which Financial applied towards the retirement of approximately $10,050,000 in debt at maturity. This decrease was mitigated by net income of $3,546,000 for the six months ended June 30, 2025.
Current wording
At September 30, 2025, the Bank had a leverage ratio of 9.02%, a Tier 1 risk-based capital ratio and Common Equity Tier 1 (CET1) ratio of 11.41%, and a total risk-based capital ratio of 12.20%. As of both September 30, 2025 and December 31, 2024, the Bank’s regulatory capital levels exceeded those established for well-capitalized institutions.
Previous wording
Act. Consequently, Financial does not calculate its financial ratios on a consolidated basis. If calculated, the capital ratios for the Company on a consolidated basis at June 30, 2025 would be lower than those of the Bank, because a portion of the proceeds from the sale of notes previously issued by the holding company were contributed to the Bank as equity.
Current wording
The above tables set forth the capital position and analysis for the Bank only. Because total assets on a consolidated basis are less than $3,000,000,000, Financial is not subject to the consolidated capital requirements imposed by the Bank Holding Company Act. Consequently, Financial does not calculate its financial ratios on a consolidated basis. If calculated, the capital ratios for the Company on a consolidated basis at September 30, 2025 would be lower than those of the Bank, because a portion of the proceeds from the sale of notes previously issued by the holding company were contributed to the Bank as equity.
Previous wording
Comparison of the Three and Six Months Ended June 30, 2025 and 2024
Current wording
Comparison of the Three and Nine Months Ended September 30, 2025 and 2024
Previous wording
For the three and six months ended June 30, 2025, the Company reported net income of $2,704,000 and $3,546,000, respectively, compared with net income of $2,148,000 and $4,335,000 for the same periods in 2024. This represents an increase of $556,000, or 25.9%, for the three-month period and a decrease of $789,000, or 18.2%, for the six-month period. Basic and diluted earnings per common share were each $0.60 and $0.78 for the three and six months ended June 30, 2025, compared with $0.47 and $0.95 for the same periods ended June 30, 2024.
Current wording
For the three and nine months ended September 30, 2025, the Company reported net income of $2,752,000 and $6,298,000, respectively, compared with net income of $1,990,000 and $6,326,000 for the same periods in 2024. This represents an increase of $762,000, or 38.3%, for the three-month period, and a slight decrease of $28,000, or 0.4%, for the nine-month period.
Previous wording
The increase in net income in the three months ended June 30, 2025 from the three months ended June 30, 2024 was primarily driven by higher net interest income, credit loss recoveries and lower interest expense, and was partially offset by an increase in noninterest expense and a modest decline innoninterest income. The decrease for the six months ended June 30, 2025 from the six months ended June 30, 2024 was driven primarily by an approximately $1,000,000 fee paid in the first quarter of 2025 to a consultant for services rendered in negotiating a contract with our core services provider. The following provides a more detailed analysis of the components that impacted net income for the three and six-month periods ended June 30, 2025, as compared with the same periods in 2024:
Current wording
A more detailed analysis of the components that impacted net income for the three and nine-month periods ended September 30, 2025, compared with the same periods in 2024, follows:
Previous wording
For the three and six months ended June 30, 2025, net interest income increased to $8,250,000 and $15,969,000 from $7,091,000 and $14,041,000 for the same periods in 2024, reflecting growth in the loan portfolio, higher yields on earning assets and an 11.9% decline in total interest expense.
Current wording
Net interest income increased to $8,300,000 and $24,269,000 for the three and nine months ended September 30, 2025, from $7,509,000 and $21,550,000 for the same periods in 2024, reflecting growth in the loan portfolio and improved yields on earning assets.
Previous wording
For the three and six months ended June 30, 2025, interest income increased to $11,638,000 and $22,872,000 from $10,935,000 and $21,444,000 for the same periods in 2024, primarily due to higher interest rates on our interest-earning assets. The average rate on loans was approximately 5.70% and 5.63% for the three and six months ended June 30, 2025, compared with 5.42% and 5.35% for the same periods in 2024. The rate on total average earning assets also rose to 4.86% and 4.80%, up from 4.68% and 4.62%. These increases were driven by a general increase in market interest rates, the origination of new loans at higher yields over the past six to twelve months, and the repricing of adjustable-rate loans in the portfolio.
Current wording
For the three and nine months ended September 30, 2025, interest income increased to $11,771,000 and $34,643,000, respectively, compared with $11,563,000 and $33,007,000 for the same periods in 2024. The increase in interest income was primarily attributable to higher average loan balances and improved yields on earning assets. The average rate on loans was approximately 5.70% and 5.65%% for the three and nine months ended September 30, 2025, compared with 5.65% and 5.45% for the same periods in 2024. Yields on total interest-earning assets also rose, driven by loan repricing and origination of new loans at higher market rates.
Previous wording
For the three and six months ended June 30, 2025, interest expense was $3,388,000 and $6,903,000, compared with $3,844,000 and $7,403,000 for the same periods in 2024. This decline resulted primarily from reductions in rates paid on certain deposit categories during the periods. The Company’s average rate paid on interest-bearing deposits was approximately 1.66% and 1.70% for the three and six months ended June 30, 2025, compared with 1.94% and 1.89% for the three and six months ended June 30, 2024. The Company’s average rate paid on total interest-bearing liabilities was approximately 1.71% and 1.70% for the three and six months ended June 30, 2025, compared with 1.99% and 1.93% for the three and six months ended June 30, 2024.
Current wording
For the three and nine months ended September 30, 2025, interest expense was $3,471,000 and $10,374,000, compared with $4,054,000 and $11,457,000 for the same periods in 2024—a decline of 14.4% and 9.5%, respectively. The decrease in interest expense resulted primarily from repricing of maturing time deposits and money market accounts at lower rates, along with disciplined deposit pricing strategies during the period. The Company’s average rate paid on interest-bearing deposits and total interest-bearing liabilities was approximately 1.72% and 1.73%, respectively, for the three months ended September 30, 2025 compared with 2.01% and 2.05% for the same period in 2024. The Company’s average rate paid on interest-bearing deposits and total interest-bearing liabilities was approximately 1.70% and 1.74%, respectively, for the nine months ended September 30, 2025 compared with 1.93% and 1.97% for the same period in 2024.
Previous wording
The fundamental source of the Bank’s net revenue is net interest income, the difference between (i) interest and dividend income on interest-earning assets (primarily loans, investment securities, and other investments) and (ii) interest expense on interest-bearing liabilities (principally deposits and other borrowings). Net interest income for the three months ended June 30, 2025, was $8,250,000, compared to $7,091,000 for the same period in 2024. The net interest margin was 3.45% for the quarter ended June 30, 2025, versus 3.03% for the comparable period in 2024. The margin expansion was largely because higher yields on our earning assets outpaced growth in the cost of funds. The deposit mix continued to shift, with time deposits comprising a smaller share of total interest-bearing liabilities. Although the Federal Reserve reduced the federal funds rate in late 2024, the current rate environment remains uncertain and may continue to pressure the margin in future periods. For example,
Current wording
The fundamental source of the Bank’s net revenue isnet interest income—the difference between (i) interest and dividend income on interest-earning assets (primarily loans, investment securities, and other investments) and (ii) interest expense on interest-bearing liabilities (principally deposits and other borrowings).
Previous wording
Gains on sale of loans held for sale (primarily through the Mortgage Division), which increased to $1,589,000 and $2,426,000 for the three and six months ended June 30, 2025, from $1,273,000 and $2,200,000 for the same periods in 2024.
Current wording
Gains on sale of loans held for sale, primarily through the Mortgage Division, totaled$1,242,000 and$3,668,000, compared with$1,326,000 and$3,526,000 for the same periods in 2024.
Previous wording
Purchase mortgage originations totaled $52,793,913 and $81,117,249 or 87.30% and 86.12% respectively, of total mortgage loans originated in the three and six months ended June 30, 2025, as compared to $47,202,810 and $78,218,322 or 87.15% and 86.28%, respectively, of the total mortgage loans originated in the same periods in 2024. Because of a relatively higher mortgage interest rate environment, management anticipates that in the short term, purchase mortgage originations will continue to represent a significant percentage ofmortgage originations. Management also believes that a continued elevated interest environment could continue to limit refinancing activity.
Current wording
Purchase mortgage originations totaled $42,830,847 and $123,948,096, or 81.22% and 84.36%, respectively, of total mortgage loans originated in the three and nine months ended September 30, 2025, as compared to $31,015,512 and $120,657,357, or 84.98% and 83.02%, respectively, of the total mortgage loans originated in the same periods in 2024. Because of a relatively higher mortgage interest rate environment, management anticipates that in the short term, purchase mortgage originations will continue to represent a significant percentage of mortgage originations. Management also believes that a continued elevated interest environment could continue to limit refinancing activity.
Previous wording
Mortgage rates increased dramatically in 2022 and 2023 and remain elevated compared with recent history. While rates have generally stabilized since then, these higher levels continue to negatively impact mortgage origination volume. Due to the uncertainty surrounding current and near-term economic conditions—arising from inflation, as well as geopolitical and economic concerns—management cannot predict future mortgage rates. Management also believes that relatively high interest rates may continue to put pressure on revenue from the mortgage segment.
Current wording
Mortgage rates increased dramatically in 2022 and 2023 and, despite recent declines, remain elevated compared with recent history. While rates have generally stabilized or declined since then, he elevated interest rate environment continues to have a negative impact on mortgage origination volume compared to pre-2022 levels. Due to the uncertainty surrounding current and near-term economic conditions—arising from inflation, as well as geopolitical and economic concerns—management cannot predict future mortgage rates. Management also believes that relatively high interest rates may continue to put pressure on revenue from the mortgage segment.
Previous wording
We conduct our investment advisory business through PWW, which Financial acquired on December 31, 2021. PWW, based in Lynchburg, Virginia, had approximately $929,957,000 in assets under management and advisement as of June 30, 2025, as compared to $853,997,000 on December 31, 2024. This increase was due to both the inflow of new assets of approximately $33,960,000 during the six months ended June 30, 2025 and a general increase in the market value of publicly traded equity securities. PWW operates as a subsidiary of Financial and generates revenue primarily through investment advisory fees, which vary based on the value of assets under management. These assets may fluctuate due to client action and market conditions. Despite potential fluctuations, we anticipate that PWW will continue to contribute meaningfully to the Company’s consolidated net income.
Current wording
We conduct our investment advisory business through PWW, which Financial acquired on December 31, 2021. PWW, based in Lynchburg, Virginia, had approximately $984,747,000 in assets under management and advisement as of September 30, 2025, as compared to $853,997,000 on December 31, 2024. This increase was due to both the inflow of new assets of over $32,000,000 during the nine months ended September 30, 2025 and investment returns on the assets under management. PWW operates as a subsidiary of Financial and generates revenue primarily through investment advisory fees, which vary based on the value of assets under management. These assets may fluctuate due to client action and market conditions. Despite potential fluctuations, we anticipate that PWW will continue to contribute meaningfully to the Company’s consolidated net income.
Previous wording
Management anticipates that the amended core-service provider contract, with its 65-month term beginning April 1, 2025, will generate significant cost savings—projected at over $40,000 per month over the life of the agreement—as compared to our previous arrangement.
Current wording
Management anticipates that the amended core-service provider contract, with its 65-month term which began April 1, 2025, will generate significant cost savings—projected at over $40,000 per month over the life of the agreement—as compared to our previous arrangement, subject to standard provisions regarding early termination or adjustment.
Previous wording
As part of our regular model governance cycle, we worked with our external CECL vendor in the second quarter of 2025 to update several inputs in our discounted cash flow models including the following: raising certain loss-rate ceilings, incorporating post-pandemic loss history, and updating prepayment and curtailment expectations. While these refinements better align the models with current credit conditions, they also shifted the quarter’s allowance calculation from what would otherwise have been a charge to earnings to a net recovery. Absent the new assumptions, management estimates that a small provision would have been required, rather than the recovery recognized this quarter. Management will continue to review model performance each quarter and make adjustments as appropriate.
Current wording
As part of our regular model governance cycle, we worked with our external CECL vendor in the second quarter of 2025 to update several inputs in our discounted cash flow models including the following: raising certain loss-rate ceilings, incorporating post-pandemic loss history, and updating prepayment and curtailment expectations. While these refinements better align the models with current credit conditions, they also shifted the second quarter’s allowance calculation (which impacted the nine months ended September 30, 2025) from what would otherwise have been a charge to earnings to a net recovery. See Note 8 for additional details. Management made no changes to the model in the third quarter 2025.
Previous wording
Based on the application of the credit‐loss calculation, the Bank recorded arecovery of $528,000 and $391,000 for the three and six months ended June 30, 2025, compared to arecovery of $123,000 and $676,000for the three and six months ended June 30, 2024. The provision attributable to unfunded commitments was$27,000 for the three months ended June 30, 2025 (not included in the allowance). Principal recoveries of approximately$11,000 for the three months ended June 30, 2025 also contributed to the recovery.
Current wording
Based on the application of the credit-loss calculation, the Bank recorded a provision for credit losses of $91,000 for the three months ended September 30, 2025, and a recovery of provision for credit losses of $300,000 for the nine months ended September 30, 2025, compared to a provision of $92,000 and a recovery of $584,000 for the same periods in 2024. The provision attributable to unfunded commitments and recorded in other liabilities was $82,000 for the three months ended September 30, 2025.
Previous wording
At June 30, 2025, the allowance for credit losses was $6,308,000, or 0.96% of total loans outstanding, compared with $7,044,000, or 1.10%, at December 31, 2024 and $6,951,000, or 1.12% of total loans outstanding, at June 30, 2024. The allowance for credit losses for individually evaluated loans was $72,000 at both June 30, 2025, and December 31, 2024 (see Note 8 for detail).
Current wording
At September 30, 2025, the allowance for credit losses was $6,298,000, or 0.95% of total loans outstanding, compared with $7,044,000, or 1.09%, at December 31, 2024, and $7,078,000, or 1.12%, at September 30, 2024. The decrease from year-end reflected continued stable credit quality, limited charge-offs, and ongoing strong loan performance (see Note 8 for detail). The allowance for credit losses for individually evaluated loans was $71,000 September 30, 2025 as compared to $193,000 at December 31, 2024.
Previous wording
Charged‐off loans, which are loans that management deems uncollectible, are charged against the allowance for credit losses and constitute a realized loss. We had charged‐off loans of approximately$62,000 for the three months ended June 30, 2025, as compared to$65,000 for the same period in 2024. While a charged‐off loan may subsequently be collected, such recoveries generally are realized over an extended period of time. We had principal recoveries of approximately $11,000 for the three months ended June 30, 2025, as compared to$74,000 for the same period in 2024.
Current wording
Charged-off loans, which are loans that management deems uncollectible, are charged against the allowance for credit losses and constitute realized losses. The Bank recorded net charge-offs of approximately $20,000 for the three months ended September 30, 2025, compared with net recoveries of $21,000 for the same period in 2024. While a charged-off loan may subsequently be collected, such recoveries generally are realized over an extended period of time.
Showing the first 40 of 41 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
The Bank has pledged (market values):
Current report — wording carried from elsewhere
The Tier 1 risk-based capital ratio decreased modestly from December 31, 2024, primarily due to the dividend payment to Financial of $5,000,000 during 2025, which Financial used toward the retirement of approximately $10,050,000 in debt at maturity. This impact was partially offset by net income of $6,298,000 for the nine months ended September 30, 2025.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Allowance and Provision for Credit Losses,” management has provided for any anticipated losses on these loans in the allowance for credit losses.
Previous report — wording carried elsewhere
The above tables set forth the capital position and analysis for the Bank only. Because total assets on a consolidated basis are less than $3,000,000,000, Financial is not subject to the consolidated capital requirements imposed by the Bank Holding Company